Local ownership critically important for Cape Breton

Cape Breton continues to see the loss of too many valued jobs in high-profile businesses, the latest being Target in Sydney.

The reasons for that retailer’s failure are well documented, but it seems unlikely any other new major retailer will make a full-frontal entry into the Canadian market anytime soon. Our thoughts are with the many employees whose futures are now uncertain.

Target brings to light the importance of local business ownership and control of non-business organisations. Cape Breton has a long history of on-island businesses being sold into off-island ownership, at which point the responsibility and accountability for major decisions becomes remote. This happened with the coal and steel industries in past centuries and the trend continues today. So even if the Sydney operation prospers, problems at the ownership level can lead to local closure.

This trend is not confined to private and corporate sector businesses. Within the public sector, restructuring of district health authorities is leading to resources being concentrated in Halifax. Given the parlous state of the Nova Scotian provincial finances, we can expect further transfers of jobs and resources away from Cape Breton in other services. This exacerbates the polarity between the Halifax Regional Municipality, which prospers relative to Cape Breton, even though it is in turn dwarfed by comparison with the major cities of Central and Western Canada.

Local ownership and accountability of businesses are critically important for Cape Breton. Inward investment in most sectors is to be welcomed, and is essential where large capital investments are required, but must not be a substitute for generating and sustaining locally owned and governed organisations.

One of the most important social units is the family business, since most small businesses are family owned and run. Cape Breton and, indeed, Nova Scotia have a long and proud history of family entrepreneurship, with successful dynasties being those able to transfer ownership from one generation to the next. This succession is a critical point for family firms, and if the moment comes when there is no succession plan, the business can face a crisis leading to forced sale or closure.

Research has shown that many Island family businesses are poorly prepared for this. An initiative to support the transfer of viable firms to new owners, which may include their employees, needs to be considered and may result from work on immigration and entrepreneurship currently under way. Otherwise we risk the slow death of otherwise sound businesses and the jobs and services they provide.

What is the solution?

One area in which Cape Breton has particular strengths is in alternative ownership models for organisations, which need not depend on a single family or individual. The co-operative movement, going back to its Tompkins and Coady roots, continues to be significant, not least in the Acadian districts of the island. The co-op model needs to adapt and develop in a changing, more individualistic context, but it has continuing strength and validity.

Social enterprises can offer a range of options for ownership, and both New Dawn, through their Innovation Fund, and the BCA Group operate locally under the CEDIF framework, enabling them to invest in and own existing businesses, including buying out family firms. These funds contribute to the retention and development of a number of successful organisations.

Finally, the Membertou model shows that community and ownership can be a highly effective strategy for First Nations entrepreneurship, from which we can all gain inspiration.

These approaches should give us reasons to be optimistic that Cape Breton can develop and retain locally owned viable businesses and social enterprises. As the mood music in the national economy darkens and jobs "out West" become scarcer and make smaller contributions to the Island economy, local enterprise and business ownership will become ever more important to us. We have the tools: we need to put them to work with local businesses.

Professor David Rae is Dean, Shannon School of Business, Cape Breton University. He writes in a personal capacity.